Mogomotsi Mogodiri
Pretoria - The preservation of the Optimum Coal Mine assets resulting from an application by the National Prosecuting Authority (NPA) while other parties that benefited from the transaction are not pursued exposes the prevalent duplicity of those at the head of that organisation.
Earlier this year, the North Gauteng High Court handed down a judgment in favour of the NPA that preserved the assets of Optimum Coal Mine.
This order came on the back of an application by the National Director of Public Prosecution (NDPP), advocate Shamila Batohi, that made several averments including that the Optimum Coal Mine was “the fruit of a poisoned tree as it was reportedly purchased with dirty money”.
In court papers, Batoyi stated that the action was part of the NPA’s ongoing fight against corruption, money laundering and other crimes.
Where did it all start? The history of Optimum Coal Mine and its association with Eskom is legendary. Preceding the 1994 political settlement, Optimum entered into a long-term coal supply agreement (CSA) with Eskom.
The evergreen contract has been perpetuated to date and has had its impact on the future, or lack thereof, of Eskom.
It is common cause that Glencore owned Optimum, and when it could not get its way through allegedly blackmailing Eskom executives to exponentially increase its price per ton of coal, the mining company was taken over by or sold to Tegeta, allegations and counter-allegations about the transaction notwithstanding.
The sale of Optimum was triggered, in the main by financial difficulties as a result of not being able to fully comply with the terms of the CSA it entered into with Eskom.
That crisis deepened in 2014 when it battled to deliver coal to Eskom as per the terms of the CSA while there was a penalty of more than R2 billion for defaults, including supplying substandard coal to Eskom.
In an attempt to save it, Optimum together with its parent company, Optimum Coal Holdings (OCH), was placed in business rescue, and joint business rescue practitioners (BRPs) of both companies were appointed while Werksmans Attorneys played a legal advisory role.
The business rescue practitioners and the rest of the team oversaw the sale of OCH’s shareholding in OCM, and various other subsidiaries of OCH, including Optimum Coal Terminal and Koornfontein Mines to Tegeta Exploration and Resources.
It is trite that this transaction was concluded with the full knowledge that Tegeta was owned and controlled by the Gupta family.
It was also public information, at the time, that Absa, FNB, Nedbank and Standard Bank had closed all accounts associated with the Gupta family.
Any transaction of this nature with its complexity expected and required that the co-BRPs with their advisory team conducted any pre-sale due diligence on Oakbay and the affected Gupta family members. They were also expected to audit the source of funds that were ultimately deposited into Werksmans trust account and then paid out to Investec, RMB and Nedbank.
Available information points to no due diligence exercise having been conducted on these entities and individuals. This amounts to recklessness or negligence, at best, and dereliction of duty, at worst.
In the unlikely situation they did conduct the requisite due diligence, they stand accused of concealing crucial and relevant information to the creditors. This omission or concealment constitutes gross misconduct that needs to be adequately probed.
Reportedly, the joint business rescue practitioners benefited from a mouth-watering R90 million; BRPs legal advisers, Werksmans Attorneys, an undisclosed amount; Investec, RMB and Nedbank received R2.5 billion and Optrix received an undisclosed amount.
Apparently, the benefit was R1bn more than the Optimum Coal Mine’s business rescue plan envisaged the lenders would receive in a liquidation settlement – not slim pickings by any stretch of the imagination.
Fast-forward to the court case, and Batohi insists in her papers that people “knew or ought to have known about the allegations against the Guptas that prevented organs of state from doing business with companies associated with that family”.
As if that was not contradictory or inconsistent enough, the State requested that Perry’s Francois van den Steen, a co-business rescue practitioner who knowingly sold Optimum to Tegeta, be appointed curator de bonis in relation to Tegeta’s shareholding in Optimum Coal Terminal and OCM, and the business of OCM in its preservation application. These are the same shareholdings and business which Van den Steen knowingly sold to the Gupta family members.
It goes without saying that Van den Steen’s conduct contradicts the argument advanced by Batohi in court that people “knew or ought to have known” that some members of the Gupta family were facing allegations that should have prevented organs of the state doing business with them”.
The “request” by the NDPP raises other questions regarding the appropriateness of the appointment of Van den Steen as curator. Are there no other business rescue practitioners that the NPA could have proposed given Van den Steen’s conflict of interest, if not untenable situation, in this saga?
Why is the NPA selective in its “fight against corruption, money laundering and other crimes” in this matter? Glaringly, the NPA’s application for the preservation order is not targeted at the key beneficiaries of the alleged dirty money.
The NDP’s forfeiture applications omit, deliberately or otherwise, to point out that the BRPs, their legal advisers, Investec, RMB, Nedbank and Optrix would also “all have known or ought to have known the allegations against the Guptas and ought to have acted accordingly”.
Disappointingly, the NPA is not pursuing these individuals and entities who not only failed to act on the media allegations, but did not “conduct extensive due diligence on the affected Gupta family members and the source of funds prior to protecting their own respective financial interests and taking what the NDPP alleges was dirty money”.
This glaring“oversight” is inconsistent and points to bias in favour of and against parties to this dispute. South Africans need not be reminded of the other inconsistency – the failure or unwillingness on the part of Batohi to pursue the beneficiaries of the alleged fruits of the poisoned tree.
According to affected communities, the benefit to the lenders, in particular, was not even limited to the amounts paid by Tegeta as their usual suspect, Glencore, contributed an additional amount of more than R400m to ensure that the lenders were paid in full.
This “contribution” was possible because Glencore benefited from the sale of OCH’s subsidiaries by virtue of saving R120m on a monthly basis which OCM was losing on the basis of the CSA between Eskom and OCM.
Logic dictates that if Tegeta’s portion was tainted with illegality or it was the proceeds of crime, then the lenders and business rescue practitioners and their advisory teams benefited by these amounts and the additional amounts paid by Glencore.
The contentment of the banks in accepting the alleged proceeds of crime – a whopping R2bn – also proves that banks are not closing banking accounts of certain individuals and companies due to the oft-peddled claim of reputational risk and anti-money laundering concerns, but do so for other ulterior motives.
These inconsistencies and biases and the seeming dereliction of duty by our courts cannot be ignored as they set a bad legal precedent while eroding the credibility of the NPA and the judiciary.
The preservation order has also dealt a fatal blow to the economy of Hendrina and other neighbouring towns as businesses that relied on the operation of the mine have been forced to close.
With the mooted “transition to clean energy” the future of the Hendrina and other coal mining communities looks bleak, and a well-thought-out plan that will ensure the revival of the local economies of coal mining communities that will be devastated by the irrational move to sell our coal to developed countries, which are coercing and even bribing us to abandon our coveted mineral resource as our source of energy while we suffer under the weight of rolling blackouts.
It is mischievous that our country is buying into this scam when countries including Germany are returning to coal.
South Africans should not let their lives and livelihoods be sacrificed at the altar of political and economic expediency.
Pretoria News